Peace group says 'crazy' decision will harm security

Security cabinet okays legalizing 5 outposts, sanctioning PA officials

Smotrich will in turn release PA tax funds, extend waiver to let Palestinian banks work with Israel; steps include Israeli building enforcement in Area B, which would violate Oslo deal

File: A sign pointing to the Evyatar outpost, in the West Bank, June 22, 2023. (Flash90)
File: A sign pointing to the Evyatar outpost, in the West Bank, June 22, 2023. (Flash90)

The security cabinet on Thursday night approved legalizing five West Bank outposts and a series of sanctions against the Palestinian Authority.

The action was first announced in a statement by Finance Minister Bezalel Smotrich and later confirmed by Cabinet Secretary Yossi Fuchs. The Prime Minister’s Office did not make any immediate comment.

In return for the measures, Smotrich will sign off on moves unfreezing the last three months of tax funds withheld from the Palestinian Authority, a senior Israeli official told The Times of Israel.

The hardline minister will also extend a waiver allowing Israeli banks to work with their Palestinian counterparts for the next four months, the official said.

These two moves were absent from the minister’s statement.

Smotrich said the sanctions were in response to the PA’s actions against Israel at the International Criminal Court, International Court of Justice and the UN along with the decisions by three European countries to recognize a Palestinian state. Neither the ICC’s pursuit of arrest warrants nor the ICJ’s genocide case against Israel were launched by the PA, but Ramallah has supported them.

The outposts set to be legalized are Evyatar in the northern West Bank, Sde Efraim and Givat Asaf in the central West Bank, and Heletz and Adorayim in the south of the territory, the finance minister’s office said.

Smotrich said the cabinet also approved advancing plans for thousands of new settlement homes in the West Bank.

While the international community considers all settlements illegal, Israel differentiates between settlement homes built and permitted by the Defense Ministry on land owned by the state, and illegal outposts built without necessary permits, often on private Palestinian land. In recent years, though, Israeli governments have increasingly sought to regulate the wildcat outposts, rather than demolish them.

Among the steps proposed that Smotrich said would be taken against the PA were the cancellation of various benefits for officials; cancellation of exit visas for PA officials and restrictions on their movement; “enforcement action against incitement” by PA officials; and transfer of enforcement responsibilities from the PA to Israel in a nature reserve in the Judean desert that right-wing groups — including one founded by the minister — claim has seen unbridled Palestinian building activity, damaging heritage sites and the environment.

The preserve is located in Area B of the West Bank, though, where the PA is supposed to be the party with civilian control. Israel carrying out such actions there would violate the Oslo Accords.

Those agreements from the 1990s also require Israel to transfer to Ramallah each month Palestinian tax revenues collected on the PA’s behalf. Smotrich has refused to do this since April, bringing the authority to the brink of collapse, despite repeated warnings by Israel’s security establishment and the international community. The tax revenues account for some 70 percent of the PA’s annual income.

Finance Minister Bezalel Smotrich leads a Religious Zionism faction meeting at the Knesset, in Jerusalem, June 24, 2024. (Chaim Goldberg/Flash90)

Smotrich agreed to release some of these funds and sign a waiver extending indemnity to Israeli banks that cooperate with Palestinian ones once the sanctions against the PA were passed.

The tax revenues will allow the PA to limp on after several months in which it was only able to pay employees half of their salaries. But they will only be receiving a very partial amount of what they’re owed, as the finance minister has refused to send the portion that the PA uses to pay for services and employees in Gaza, which he says will end up in the hands of Hamas. This portion makes up roughly 40% of the revenues.

Earlier this year, Israel and the PA agreed to transfer the Gaza portion of tax revenues to Norway, which would eventually release it to Ramallah upon approval from Smotrich. But that agreement fell apart after Norway joined Spain and Ireland in recognizing a Palestinian state.

Israel also deducts tens of millions of dollars each month to account for the money that the PA pays to terror convicts and the families of slain attackers. The PA is in the final stages of reforming this policy, officials told The Times of Israel in March.

The US had pushed Smotrich to sign a one-year extension to the corresponding banking waiver, but the finance minister was pushing before Thursday’s vote to extend indemnity by as few as three months.

The July 1 expiration of the banking waiver would severely hamper the West Bank economy, which is intrinsically dependent on Israel due to the power imbalance between the sides.

It’s unclear if the scheme will placate Washington, though. A US official said last week that the sides are liable to find themselves in the same situation a month or two down the line “if and when [Smotrich] decides to hold up the funds again.”

“These funds cannot continue to be held for ransom. They belong to the Palestinians,” the US official told The Times of Israel.

Palestinian Authority President Mahmoud Abbas poses for a picture with the Palestinian government that was sworn in on March 31, 2024, in Ramallah, in the West Bank. (Jaafar Ashtiyeh / AFP)

The Biden administration fears the collapse of the PA would lead to chaos in the West Bank that would be exploited by Hamas and Palestinian Islamic Jihad cells to open a new front to the war in Gaza, a second US official said last week, adding that the concerns are shared by the Israeli security establishment.

Such a collapse would also scuttle US planning for postwar Gaza, where Washington hopes a reformed PA will eventually return, reuniting the West Bank and the Strip under one political entity and establishing a pathway to a future Palestinian state.

Meanwhile, the decision to legalize West Bank outposts was applauded by settler leaders overnight.

Yossi Dagan, head of the Samaria Regional Council, said in a statement it was a “Zionist decision and a strong message of victory.”

“The new settlement will complete a succession of settlements in the region,” said Yaron Rosenthal, the head of the Gush Etzion Regional Council.

Israel Gantz, head of the Binyamin Regional Council, cast the decision as a measure “that strengthens the State of Israel.”

But the Peace Now organization said the decision was “crazy” and damaged Israel’s relations with the US.

“Instead of worrying about the neglected residents of the south and the north, the settler government is giving a prize to criminals at the height of the war to satisfy Smotrich, who is collapsing in the polls,” the group said, referencing surveys showing his Religious Zionism party failing to enter the Knesset if elections were held.

“This is an illegitimate government that lost the faith of the people a long time ago and is being managed by a messianic, extremist minority that has to get out of our lives,” it added.

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